Time for Holyrood to step in on rates

STA calls for freeze on implementation until Barclay group reports

By Dave Hunter & Matthew Lynas

OPERATORS, trade groups and local councillors are imploring the Scottish Government to intervene on business rates as proposed increases of up to 300% have emerged.
New draft rateable values for non-domestic properties, due to come into force on April 1, have seen many licensed premises across Scotland hit with huge increases.

Last week the Scottish Tourism Alliance (STA) wrote to first minister Nicola Sturgeon urging her to take action, claiming many businesses could face closure if the new rates are implemented.

• A letter was sent to Derek Mackay.

In the letter, STA chief executive Marc Crothall said the association has been contacted by members and non-members alike who have expressed “deep concern to us about the significant increase in business rates”.
Crothall has called for a freeze on the introduction of new rates until after the Barclay review group presents its findings to Scottish ministers in July.
The letter concludes by requesting a meeting with the first minister to discuss the rates issue further.
The STA missive coincided with another letter, this time presented to Scottish finance minister Derek Mackay, from a group representing the late-night industry in Aberdeen.

Unight, whose membership includes bar and nightclub operators as well as representatives from Safer Aberdeen and Police Scotland, has argued that there should be “special dispensation” for businesses in the north east as their rateable values were calculated prior to the collapse in the oil price.Unight chair Stuart McPhee, who is general manager of Aberdeen vodka bar Siberia, said: “In the last two years everything has been downhill.

“It’s all been doom and gloom, people going into administration. Even big operators like Holiday Inn and Jamie’s Italian (have closed venues), as well as small operators.
“We’ve already been in an atmosphere of cuts, cuts, cuts and now our profits are going to get decimated again by an increase in rates.”
Aberdeen councillor Willie Young also called on Scottish Government ministers to intervene on behalf of Aberdeen businesses.
Speaking to SLTN, Young, a former publican, said Aberdeen City and Aberdeenshire councils “know the problems the industry is going through”.

“The data for the revaluations is from 2015,” said Young.
“And in 2015 things in Aberdeen and Aberdeenshire were going like a fair.
“The reality is they’re not going like a fair in 2017.
“The reality is we’re not any worse or better than anybody else, but because of when the rates were taken we are at an artificial level.
“It’s an unfair playing field for us, because of the way things have happened.
“So we’re hoping Mr Mackay will understand that and give us some transitional relief.”
Young suggested giving businesses several years to transition from the previous rates to the new structure rather than increasing immediately on April 1.
“The last thing we want is to see pubs and hotels close down, or to be unviable,” said Young.
“The Scottish Government is always going on about tourism and how important it is to get people to Scotland – but they just won’t come to Aberdeen and the north east because why would they?
“The place will be shut down.”

Moray operator Graham Fleming echoed this when telling SLTN about the draft rateable value for his premises, the Beach Bar in Lossiemouth.
The current rateable value for the business is £13,500; according to the Scottish Assessors Association website the new draft rateable value is £42,750.
Fleming said he will struggle to pay his new business rates, which he said will also see his Sky Sports subscription increase as a result of the higher rateable value.
“This summer will be 30 years we’ve had the business,” Fleming told SLTN.
“It’s only in the last few years, as money’s been freed up and available, and new loans have been made available to business, that we’ve been able to invest into the business for the future, for the longevity of the business, and then you get a hammer-blow.

“The consequence of hiking my rates is that I’ll maybe be able to trade throughout the summer and into the winter, and if I have a bad winter that’ll be it.”
Explaining the revaluation process Grampian assessor Ian Milton said the rateable values of licensed premises are assessed on the basis of their rental value, with hypothetical achievable turnover used as a criterion in calculating the rental value of the property.
“To say the properties are valued on turnover, which many people made the mistake of doing, is incorrect,” said Milton. “It’s merely used as a comparator. They’re valued according to the rent, or annual value, that we believe these properties would attract.”

He added that each revaluation is “a fresh look” at that property, with the last rateable value not taken into account.
“Each revaluation is essentially somebody pressing the reset button,” he said.
“The assessors start again with the whole revaluation process. What they don’t say is ‘how much has something increased by?’”
Milton added that if revaluations were done more often “people probably wouldn’t see much change year-on-year”.
When asked about the potential closure of licensed premises as a result of business rates hikes, a spokeswoman for the Scottish Government said: “We value the licensed trade sector, which makes an important contribution to the Scottish economy.

“It has always shown itself to be resilient – and new figures show that pubs and restaurants in Scotland are less at risk of insolvency than the UK average.
“Scotland’s pubs were also found to be ‘the most stable in the UK’ while Scotland’s restaurant sector put in the second best performance.”